EFFECTIVE BOARD
DECISION MAKING
Bret Wilson
The Triangle Companies
An Effective Board Decision Making
Process
• All board members contribute to the effectiveness
of each and every board meeting
• Chairman organizes the meeting to allow
participation, debate and decision as well as
manage conflict and problems
• The board works with management to anticipate
and provide the information needed for decisions
• New members are oriented as to the processes
used by the board
• Multiple tools are used in choosing the best
solution to a problem.
The Top Function Of The Board
Of Directors Is To Make Good
Decisions That Are Best For The
Cooperative And Its Members.
DIFFERENT TYPES OF
DECISIONS
• Strategic
• Tactical
• Operational
STRATIGIC DECISIONS
• Provide the cooperative with a general direction
• Determines long-term goals and values
• Includes the especially important or risky
decisions
• Decisions that involve large investments
• These decisions tend to be more broad
STRATEGIES:
• A board retreat is a good environment in which to
make strategic decisions and build consensus.
TACTICAL DECISIONS
• Planning decisions that support strategic decisions
• Effective in a medium range time frame
• Consequences and costs are less severe than those
of strategic decisions, but more severe than
operational
STRATEGIES:
• Knowledge is Power: Anticipate information
needs and ask discerning questions before making
a decision
• Make timely decisions and move on
OPERATIONAL DECISIONS
•
•
•
•
The detailed daily decisions that run the business
Have an immediate impact on the business
Low cost, low risk
Consequences and costs are minimal
STRATEGIES:
• Primarily the responsibility of management
• Should support policies and goals of the
cooperative.
• Can be set as a standard operating procedure
Goldilocks and the Three Boards
• One board is too weak
• One board is too strong
• This board is just right
Strength in decision making determines a board ‘s
SUCCESS
THE TOUGH ONES
•
•
•
•
Close an unprofitable facility.
Invest in major renovations.
Merge with another cooperative
Discontinue operations.
Questions to Ask Yourself in
Making a Tough Decision
• What can we afford?
• What will happen if we do or don’t make
this decision?
• What will be the impact on members,
employees, and the community.
STRATEGIES WHEN MAKING
TOUGH DECISONS
•
•
•
•
DISCUSS the issue with members and employees.
CONSIDER you mission and long-range plans
REINFORCE the mission and goals
TALK with other directors who have faced similar
situations and find out what they did
• ACT like a director, not a producer, and make the
best decision for the co-op
PROBLEMS IN DECISION
MAKING
• “THE PROBLEM CHILD”
• TIME USAGE
• CONFLICT AMONG THE BOARD
“THE PROBLEM CHILD”
BEHAVIOR PROBLEMS IN THE BOARD
ROOM
•
•
•
•
Members dominating discussions
Arguing just to have their own way
Being disrespectful to other members
Making “below the belt” comments
DEALING WITH PROBLEM
BEHAVIOR
• Set ground rules for discussion and enforce these
rules
• Encourage full board participation
• Separate the issues and address them one at a time
• Model good behavior in yourself
• Take a “time out” from touchy topics if discussion
gets heated
• When discussion resumes, summarize what was
said and note areas of agreement
TIME USAGE
Do
• Encourage effective discussions
• Make an agenda and stick to it
Don’t
• Allow discussion to veer off course
• Deviate to far off of the agenda
• Spend too much time on one decision
80/20 RULE
“THE TRIVIAL MANY” Decisions Will Take
Up 80% Of Your Time And Yield 20% Of
The Results
“THE VITAL FEW” Decisions Will Take Up
20% Of Your Time And Yield 80% Of The
Results
TIME EFFICIENCY TRAPS!
• Opinion Trap!
• Information Trap!
• Committee Trap!
• Policy Trap!
DON’T GET TRAPPED IN YOUR BOARD MEETING!
BOARD CONFLICT
• Conflict is a normal part of team decision
making
• Dissent may be a sign that the board has
drifted off course and must be brought back.
• Disagreements have the potential to add
information and perspective
• Too much conflict can cripple board
effectiveness
CAUSES OF CONFLICT
•
•
•
•
•
•
•
INFORMATION OR INTERPRETATION
LACK OF INFORMATION
VALUES
PROCESS
PEOPLE
PERSONALITIES
ACTIONS
DEALING WITH CONFLICT IN
DECISION MAKING
• Distinguish between “healthy dissent” and
“crippling conflict”
• Start with an assumption of a common goal
• Discuss broader issues
• Identify areas of agreement
• Clarify points of view
• Consider the evidence of BOTH or ALL sides
before committing yourself to a position.
IMPROVING BOARD
DECISIONS
TOOLS FOR BETTER DECISIONS
• Pro-Con Chart
• Matrix Assessment
• Outside Consultant
PRO-CON CHART
• Ensures that all advantages and
disadvantages are discussed
• Encourages the board to consider both sides
before committing themselves
• Board works as collaborators summarizing
information rather than competitive
debaters.
Example Pro-Con Chart
RENOVATE THE OLD ELEVATOR INSTEAD OF
BUILDING A NEW STEEL TANK
PROS
CONS
Shorter time to
completion
Retain segregation
potential
Easier to monitor grain
condition
Higher per/bushel costs
Slower throughput speed
MATRIX ASSESSMENT
• Separates complex decisions into
components
• Clarifies the trade-offs
MATRIX ASSESSMENT
COST
TIME
Renovate Build
Rent
Elevator New Tank seasonal
++
--
-
+
LONG RUN
+
++
EFFICIENCY
THIS IS YOUR PERSONAL ASSESSMENT OF
THE DIFFERENT ASPECTS OF A SITUATION.
WORKING WITH OUTSIDE
CONSULTANTS
• Consultants often identify options not
previously considered.
• The board still holds the responsibility for
the final decision.
• Consultants are a tool for better decisions
not easier decisions.
Use of Consultants Today in
Oklahoma Cooperatives
Written Reports Submitted to the Board
10%
7%
Board Sub-Committee
Manger or Staff
Outside Consult.
38%
45%
No Written Reports Used
WHEN TO BRING IN A
CONSULTANT
• WHEN the problem falls outside the company’s
technology, experience and activity
• WHEN the problem calls for impartiality and
objectivity
• WHEN the board needs information that is not
readily available to them
• WHEN a problem persists which management has
tried to resolve and failed
CRITERIA FOR SELECTING
CONSULTANTS
•
•
•
•
•
•
Expertise
Training
Background
Style fits your culture
References
Check with former clients
WORKING WITH THE
CONSULTANT
•
•
•
•
•
•
•
•
•
Define The Goals
Define The Scope Of The Project
Specify The On-site Work
Specify Follow-up
Specify Costs
Specify Deliverables
Provide A Contact Person
Provide Detailed Information
Provide Support Staff
AFTER THE CONSULTANT
LEAVES
• Discuss the consultant’s recommendation
• Discuss any new options or information uncovered
by the consultant
• Determine whether to implement the
recommendation
• If the recommendation is to be accepted, the
sooner the better
A STRONG BOARD AND A
STRONG MANGAER:
A WINNING TEAM!